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Semester, AY 2017-2018
Adamson University College of Law

Refer to Homework #2. To raise funds for buying the Property, Buenavista
applied for, and was granted, a loan from ABC Bank in the principal amount of
P10,000,000.00 (the Loan), subject to the following terms and conditions:

1. The Loan shall be payable by way of cash and/or managers check within two
years from the execution of the corresponding loan agreement, at 2%
monthly interest rate, which interest shall be payable every fifth day of the

2. Buenavista shall exclusively use the Loan for the payment of the purchase
price of the Property, and the payment of the corresponding taxes, such as,
but not limited to, Value- Added tax, documentary stamp tax, transfer taxes,
and registration fees. For this purpose, the Loan or any amount comprising
thereof shall be covered by checks payable to the necessary government
agencies and offices based on assessment notices or computations covering
said taxes and fees;

3. The loan agreement between Buenavista and ABC Bank shall not make the
latter a party to any transaction or contract entered into by Buenavista with
his creditors or other parties. Neither shall the loan agreement be construed
as a form of guarantee in favor of Buenavista to pay his debts and obligations;

4. Buenavista shall issue the promissory note in favor of ABC Bank for the
credit granted under the loan agreement; and

5. To secure his obligations under the loan agreement, Buenavista shall pledge
in favor of ABC Bank his red five-door Mini Cooper S motor vehicle with
Engine No. 34561, Chassis No. 876231, and Plate No. UI 2023.

As ABC Banks counsel, draft the loan agreement and contract of pledge between
your client and Buenavista.
1st Semester, AY 2017-2018
Adamson University College of Law

Patricia Punzalan (Punzalan) is a Filipino, of legal age, single, and residing at 75

Lanzones St., Belladona Village, Brgy. Mambugan, Antipolo, Rizal. Punzalan is the
absolute and registered owner of a parcel of land situated at San Joaquin Norte,
Agoo, Province of La Union with an area of 1,382 square meters (the Property),
more particularly described as follows:

Beginning at a point marked 1 of Lot No. 3807, Cad. 314-D, being S.26-55 W.,
861.44 m. from BLLM No. I, Cad. 314-D; thence N.74-78 E., 58.99 m. to point
2; S. 21-02 E., 10.64 m. to point 3; S. 20-05 E., 12.41 m. to point 4; S. 69-40 W.,
49.70 m. to point 5; N. 38-12 W., 29-75 m. to point 1; point of beginning.
(1,382) SQUARE METERS. All points are marked on the ground by P.S. Cyl.
Conc. Mons. Bounded on the N., along line 1-2 by Lot 3804, Cad. 314-D; on the
E., along line 2-3 by Lot 17558.

including the house and all improvements, properties, equipment, furniture,

and fixtures found therein.

Meanwhile, Eduardo Buenavista (Buenavista), is a Filipino, of legal age,

married to Amor Buenavista, and residing at Unit #642, Tower B, Greenfield
Residences, Brgy. Mariana, Quezon City.

The parties agreed that Punzalan shall sell the Property to Buenavista for the
purchase price of P16,796,000.00.

Thereafter, upon full payment of the purchase price, the parties entered into
the corresponding deed of absolute sale, subject to the following conditions:

1. Punzalan warrants: (a) her right to sell; (b) Buenavistas right to enjoy the
legal and peaceful possession of the Property, upon the transfer of ownership
thereof to him; and (c) full payment of utility bills until the execution of the
deed of absolute sale.

2. Punzalan shall pay the following: (a) capital gains or income taxes due on the
sale of the Property, whichever is applicable; and (b) real property tax up to
the date of the execution of the deed of absolute sale;
3. Buenavista shall pay for the Value-Added, documentary stamp, and transfer
taxes, registration fees, and other expenses of registration, including notarial
fees; and

4. Punzalan shall execute, deliver, and submit any additional documents and
instruments that may be required in order that the title over the Property
shall be transferred under Buenavistas name.

Draft the deed of absolute sale for this transaction.


THIS AGREEMENT is made on the 26th of JANUARY 2010 between:

NAME OF BORROWER, Party 1 (BORROWER) residing at (address

hereinafter referred to as the Borrower; and

NAME OF LENDER, Party 2 (LENDER) residing at (address) hereinafter

referred to as the Lender, and together with Borrower the Parties.

IN CONSIDERATION of the advancement of funds under the terms of

and conditions of this Agreement and other good and valuable
consideration, the Parties agree as follows:

On the execution of this agreement the Lender agrees to lend the

Borrower the sum of FOUR HUNDRED THOUSAND PESOS (the Loan)
on the terms and conditions set out in this agreement.

Interest on the Loan shall be calculated at a monthly rate of 0.5% of

the total amount Loan and shall be charged on the balance of the Loan
outstanding on a monthly basis. Said interest shall be payable by the
Borrower to the Lender monthly in arrears.

The Borrower agrees to repay the Loan demand.

The monthly installments of 4,500.00 pesos have been calculated to

allow the Loan [and interest thereon] to be repaid in full within 160

The Borrower may repay the Loan (and interest accrued thereon) at
any time after the date of this agreement without penalty.

The Borrower agreed to pay the LOAN [and interest thereon] through
PVAO Monthly Pension ATM card and agreed to give this ATM card to
the Lender until full payment of the LOAN [and interest thereon].

The Borrower agreed to give the original Certificate of Land Title to the
Lender as COLLATERAL (House and Lot) until full payment of the LOAN
[and interest thereon].

The Borrower and Lender agreed in case that the LOAN [and interest
thereon] was not paid in full due to sudden decease or death of the
Borrower that the rights and ownership of the Certificate of Land Title
of the Borrower will be legally transferred to the Lender as a full
payment for the LOAN [and interest thereon].

IN WITNESS HEREOF these presents are executed on the date before




in the presence of

Signature of witness:


Name of witness: _________________________



in the presence of

Signature of witness:


Name of witness: _________________________